4 - Supply Chains Flashcards
What Is A Supply Chain?
The sequence of processes required for the production and distribution of a good or service to the customer.
How Do Businesses Choose Its Suppliers?
(5 Points)
~ Price the supplier charges.
~ Quality a suppliers gives.
~ Predictability, reliability and flexibility.
~ Speed.
~ Payment terms.
What Is Flexibility?
Ability to respond to change.
What Happens If A Business Does Not Meet Supply?
(3 Points)
~ Loss of sales.
~ Customers go to rivals.
~ Reputational issues
What Are The Ways A Business Can Manage Supply?
(3 Points)
~ Hire temporary employees.
~ Purchase to order.
~ Outsourcing.
How Does Hiring Temporary Employees Help Manage Supply To Demand?
Hire them on short term contracts, ensuring that the business efficiently meets demand.
What Are The Benefits Of Hiring Temporary Employees?
(3 Points)
~ Flexible workforce.
~ Better able to match supply to demand.
~ Only pay workers when they work, as they are not working full time.
What Are The Drawbacks Of Hiring Temporary Employees?
(3 Points)
~ Recruitment costs associated.
~ Lower commitment and productivity.
~ Lack of skills and experience.
How Does Purchasing To Order Help Manage Supply To Match Demand?
Production starts once the order has been received from the customer.
What Are The Benefits Of Purchasing To Order?
(3 Points)
~ Helps manage stock levels.
~ Less storage costs and reduced waste.
~ Allows for bespoke and customised products.
What Are The Drawbacks Of Purchasing To Order?
(3 Points)
~ Requires high levels of flexibility.
~ Depends heavily on suppliers.
~ Struggle to meet unexpected surges in demand.
How Does Outsourcing Help Manage Supply To Match Demand?
Contract a business process to an external provider, to meet demand in a cost efficient manner.
What Is Outsourcing?
Contracting a business process to an external provider.
What Are The Benefits Of Outsourcing?
(4 Points)
~ Using specialists, offer a higher quality than if the business did it.
~ Lower costs, don’t have to employ full time labour also increases profit margins as costs have not reduced.
~ Don’t need to do capital investment, leads to higher cash flow.
~ Can focus on the businesses core competency, eliminates any unnecessary distractions.
What Are The Drawbacks Of Outsourcing?
(4 Points)
~ Loose control of that business process.
~ Could lead to quality issues, if they do they work to the bare minimum.
~ The ethics of the external provider could affect the businesses reputation.
~ Leads to over reliance on the external provider, links to porters 5 forces as it increases supplier power.
What Is Mass Customisation?
The use of computer aided manufacturing (CAM) to produce individually tailored output to customers on a large scale.
What Are The Benefits Of Mass
Customisation?
(4 Points)
~ Increased operational flexibility, to better meet customer needs.
~ Eliminate middle man, as you need closer communication with end customer.
~ Less waste as not stock is held.
~ Stimulating work environment, more diverse tasks for employees.
What Are The Drawbacks Of Mass
Customisation?
(4 Points)
~ Requires CAM, increased costs for use.
~ Less scope for EOS, due more use of different components this varies supplier costs.
~ More waste, specific to customer needs if they don’t like it they might reject it.
~ Slower response speed, as they have to wait for it to be produced.
What Will The Amount Of Stock Held Depend On?
(4 Points)
~ Businesses attitude to risk.
~ Importance of speed or response as an operational objective.
~ Speed of change within a market.
~ Nature of the product.
What Does An Inventory Control Chart Look Like?
What Is The Buffer Stock Level Of Inventory?
(3 Points)
~ Stock held by a business to cope with unforeseen circumstances.
~ When a business reaches its minimum inventory level it is left with just buffer inventory.
~ J-I-C.
Draw Buffer Level Of Inventory On The Inventory Control Chart
What Is Lead Time?
Time it takes between placing an order and receiving the delivery.
Draw Lead Time On The Inventory Control Chart
What Must You Know To Be Able To Calculate Lead Time?
Re-order level.
What Is Re-Order Level?
(2 Points)
~ The level of inventory which triggers an order.
~ Determined by lead time and the minimum inventory level.
Draw Re-Order Level On The Inventory Control Chart
